Article thumbnail

Capital Controls, Two-tiered Exchange Rate Systems and the Exchange Rate Policy: The South African Experience

By E. Schaling

Abstract

South Africa's 40 years of experience with capital controls on residents and non-residents (1961-2001) reads like a collection of examples of perverse unanticipated effects of legislation and regulation.We show that the presence of capital controls on residents and non-residents, enabled the South African Reserve Bank (SARB) to target domestic interest rates (and or the exchange rate) via interventions in the (commercial) foreign exchange market.This provides an early rationale for anchoring SA monetary policy via the exchange rate, rather than via domestic interest rates.This suggests not only that the capital controls themselves exhibited substantial institutional inertia, but that this same institutional inertia also applied to the monetary policy regime.A plausible reason for this is that for most of the 20th century in South Africa (partial) capital controls and exchange rate based monetary policies were like Siamese twins; almost impossible to separate.

Publisher: Vakgroep CentER
Year: 2005
OAI identifier: oai:wo.uvt.nl:193359
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://repository.uvt.nl/id/ir... (external link)
  • Suggested articles


    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.